By Barbara Kollmeyer

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Do all those dots lead to a hawk?

Markets connected the Fed “dots” on Wednesday, and the selling hasn’t stopped since.

As our columnist Rex Nutting noted, Fed Chairwoman Janet Yellen spoke for an hour, but investors only heard three words: “Around six months.” Reading the tea leaves: A rate hike by mid-2015, sooner than many expected, was the quick assessment. Toss in hand-wringing over the “dot plot”, and you get lots of investors hitting a wall.

It’s all risk-off, was the assessment of an analyst roundup at WSJ’s MoneyBeat. There was also plenty of criticism over how it all went down. “‘Winging it’ is also another way of stating the direction of policy. Not helpful,” said Lindsey Group’s Peter Boockvar.

Some say this was likely some bumbling by the new Fed chief. The implied earlier rate hike is “so odd that I suspect that Yellen misspoke and the market is making too much out of this,” says Eddy Elfenbein over at Crossing Wall Street. “Expect regional Fed members to be doing the media circuit trying to finesse what she actually meant,” adds London Capital’s Jonathan Sudaria.

The question is, how much lasting damage has been done? Danske Bank’s Allan von Mehren says with the normally dovish Yellen now taking on hawkish tones, the challenge is on for an already challenged bull market. He says if you pile that perceived new tone on top of current reasons Wall Street is looking vulnerable — slowing growth, rising geopolitical risks, valuation stretchiness — the case for stock caution just gets stronger. “Normally the market is counting on the Fed to come to the rescue when data weakens. It seems the ‘Fed put’ may not be so reliable at the current juncture,” he says.

Still, Spotlight Ideas’s Stephen Pope says markets may have freaked out just a bit too much, recalling that the first time Bernanke mentioned tapering there was panic as well, which turned out to be a bit premature. “The Fed has a highly sophisticated monitoring system: It follows a market Hippocratic Oath: ‘First, do no harm’,” says Pope.

The economy:The data parade keeps marching on. Weekly jobless claims arrive at 8:30 a.m. Eastern, while at 10 a.m. we get existing-home sales, Philly Fed and leading economic indicators. The manufacturing survey from the Philadelphia region is likely to draw the most eyeballs, as it could offer more clues on just how bad that weather hit was earlier this year. Check out our data rundown here.

“After signaling immediate-term trade overbought at $1,385 on Friday, and the biggest net long (futures/options contracts) position in a year, yes, gold corrected — but it didn’t break any line of support that matters in my model, and at +10.4% YTD, this is going to be your chance to buy it if you missed the move towards +15% YTD,” he says. (Also check out how to play the rising cost of commodities.)

Chart of the day: After getting beat up overnight, the Chinese yuan has been tapping that 6.20 line in the sand. This is viewed as a key area, as many structured forex products allowing bets on the yuan are set up to trigger margin calls, if the dollar rises past that level. China authorities recently widened the trading band on the currency in an effort to bring it down, and many economists say they want to keep out the bubbly foreign-capital flows that are profiting on yuan gains.

Naturally, alarm bells were ringing overnight. ZeroHedge declared a yuan collapse, with a rather scary explanation of how for every 0.1 move in USD/CNH, corporates will lose $200 million a month. ZeroHedge says as chains in the carry trades break, we’ll see copper falling more (it certainly is now), credit tightening, real-estate prices dropping and basic pandemonium. But enter The Fly over at iBankCoin, who says relax already. While it’s true that over a one-to-six-month time frame, the yuan is a lot weaker versus the dollar, over the longer term, it’s mere “child’s play,” says The Fly.

In the end, The Fly says the yuan carry-trade unravel goes nowhere unless there are events beyond China’s control that turn it into a rout. “Pardon my calmness, but this isn’t a collapse. A move from $6.05 to $6.20 doesn’t even warrant a headline.” The Fly points to the following chart to make his point:

Yep, Flappy Bird is coming back, says the creator who ditched the game. Clearly @justinbieber is among those waiting in the wings to play again, as the pop star just followed the Vietnamese games developer.

Excitement is at fever pitch. Ex-IMF chief Strauss-Kahn is collecting for a new hedge fund.

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